How to Evaluate a CEO

Don't just look at the short term numbers, says business turnaround expert Fred Hassan. Success starts at the level of company culture.

Transcript

Over a year ago

TRANSCRIPT

Fred Hassan: Sometimes chief executive officers have a great run, four or five years, and it looks great; the numbers are great, and yet something is not very good inside that company. And again and again one sees stories were there comes a very big fall. And then people look back and say, "What happened? Couldn’t we have seen this coming?" I generally look for a few warning signs that might go beyond just the numbers.

As you know, the numbers come from inside the company, and inside the company is all about people. And people, how they approach their work, their attitudes, their behaviors, is extremely important. I personally look for ways to find out what’s behind the numbers. Is it that they’re doing a better job with customers? Or is it just short-term cost-cutting to make the numbers look better and better? Are they doing a better job with innovation in terms of new products that might be better for the future? Or is it all about maximizing and milking what you have at this time? Is it aggressive selling or is it customer-oriented marketing and approaching the customer with a viewpoint of what’s right for the customer?

It’s these signals that tell you the real health of the company in terms of its long-term outlook. And finally, just looking at the employees and the kinds of people who are doing well in the company... Is it more of those who are collaborative and wanting to work for the long term versus the individual-centered people who may be very aggressive in their approach but who in the long term will not contribute much to the organization? The latter aspect about looking inside the company is a little harder. But if one looks quite hard in there you often can see signals there as well on what’s the culture inside the company.